IMF plans to rise aids for Iraq and Jordan

04 Nov 2015

It is reported that IMF or International Monetary Fund has planned for sending its team Jordan and Iraq for talks regarding economic aids to these countries. Both the countries are suffering from regressive economic conflicts. Masood Ahmed, director of the Middle East and Central Asia department at the IMF, said that Jordan has already asked for another loan. A team will be sent to Iraq next month to discuss economic aids. Iraq is plagued by corruption and conflictions with Islamic state militants. According to Ahmed, IMF will help Iraq to create a framework to cope with the present scenario. He also stated that the plan will be effective from 2016 could “then lay the basis for Iraq to come to the IMF for a financing program later in the year if things go well”. Presently Iraq is struggling due to finance a war with IS extremists who have seized large swaths of territory in Opec’s second-biggest producer at a time when plunging oil prices are squeezing government revenue. The IMF has provided $1.25bn in emergency assistance to plug a budget deficit it expects to reach 23% of Iraq’s economic output this year. Ahmed also claimed that the program will help Iraq to receive funds from World bank and other leaders. This will help the country to “go back to the market in the first half of next year to raise more financing”. Iraq’s economic crisis has battered its international bonds this year. The yield on the $2.7bn Eurobonds due in 2028 has surged more than 160 basis points, or 1.6 percentage points, to 9.502% on Tuesday. It is reported that Iraq’s economy will suffer from zero growth this year following a 2.1% contraction in 2014, according to IMF estimates. While the central bank has said the crisis doesn’t pose an immediate risk to the dinar’s dollar peg, governor Ali Mohsen Ismail said in September he could “marginally change the exchange rate” to boost government revenue. IMF also says that devaluation of currency would not help to get rid of this economic crisis. The IMF has expanded assistance to the Middle East since the Arab Spring in 2011, including to Tunisia and Jordan, which is struggling to cope with an influx of refugees from conflicts in Iraq and Syria. Kingdom has already obtained $2bn loan from IMF, which helps the country to narrow its budget deficit. Ahmed concluded, “We don’t have a number on it yet, but we do have a team that is going out there in the next few weeks to try and begin discussions on a program that the IMF could support over the next three years.”